ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
There is nothing like a significantly stronger currency to get central banks to take pause. I cannot recall in recent memory a time where a little known (or under-appreciated?) Deputy Director of the Bank of Canada made a notable impact on the Canadian dollar. Such an event occurred on Monday, September 18th. Deputy Director Timothy … Read more
“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect… …The need for internal balance – to use up wasteful spare capacity while achieving the inflation target – will likely require gradual and limited interest rate increases … Read more
(This is an excerpt from an article I originally published on Seeking Alpha on July 20, 2017. Click here to read the entire piece.) {snip} With THAT quote, Debelle rang loud and clear with a confirmation of my claims in my earlier post that the Bank would find a way to walk the market back … Read more
I greatly under-estimated the confidence of the Bank of Canada (BoC) when I mapped out the possibilities for a currency market that highly anticipated a rate hike from the Bank. In its latest statement on monetary policy, the BoC increased its target for the overnight rate by 25 basis points (bps) to 0.75%. The Bank … Read more
Going into last week’s report on Canadian employment, currency speculators retreated further from what was a record net short position against the Canadian dollar (FXC) less than two months prior. Source: Oanda’s CFTC’s Commitments of Traders This retreat is occurring in conjunction with a consistent strengthening in the Canadian dollar. For example, USD/CAD peaked in … Read more
I have been bearish on the Australian dollar (FXA) for quite some time now. My main driver was a reversal in fortunes for soaring iron ore prices that in turn weighed down the currency. Iron ore prices rebounded so much since hitting one-year lows last month that the raw ingredient for steel is now technically … Read more
Ahead of the May decision on monetary policy from the U.S. Federal Reserve, I concluded that the stars had aligned for a potential (sharp) relief rally for the SPDR® Gold Shares (GLD) and the iShares Silver Trust (SLV). In that post, I extrapolated from the market’s waning enthusiasm for two more rate hikes in 2017. … Read more
AT40 = 46.9% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 62.0% of stocks are trading above their respective 200DMAs VIX = 12.9 (volatility index) Short-term Trading Call: cautiously bullish (notable caveats explained below) Commentary The timetable for a May end to this period of extremely low volatility looks like … Read more
Now I understand better why and how the British pound (FXB) soared so much in the wake of the latest announcement on monetary policy from the Bank of England (BoE). Source: FreeStockCharts.com Going into last week’s monetary events, speculators increased their net short contract position to levels not seen since at least 2008. Source: Oanda’s … Read more
According to the latest CFTC data, speculators accumulated their largest net long position on the Canadian dollar (FXC) since February, 2013. This 4-year high in bullishness sticks out so much only because speculators have spent most of these four years being very bearish on the Canadian dollar. Prior to 2013, net longs were regularly 2 … Read more